What is Cryptocurrency Bridging?

Simply speaking, bridging involves connecting two different blockchains and allowing users to send digital currency from one chain to the other. So, for example, if you own Ethereum but want to spend or use it like Bitcoin, you can do so through a cryptocurrency bridge. 

Is Cryptocurrency Bridging Secure?

As with many other questions regarding security and safety in the blockchain space, this question boils down to a couple of aspects that can prove to be red flags. The first of these factors is the smart-contract quality and the way in which the smart contracts have been audited.

If the bridge has been constructed on a poor quality or a poorly-audited smart contract, it is likely to be insecure. The second red flag is that of network centralization and size. A network with many or a few nodes being run by a single group is just as vulnerable to hijacking as a network that is fully centralized. Beyond these two factors, it is extremely difficult to assess the strength of a bridging network without seeking expert assistance. 

Cross Chain vs Multi Chain Bridges:

What is a Cross Chain Bridge?

A cross-chain network aims to facilitate a smooth informational exchange between two different blockchain networks, thereby improving the connection between these networks. Such a network does away with the generally isolated nature of blockchain technology by developing a network of various connected blockchains.

For instance, the ability to make a call to a phone that uses a different operator to yours highlights the importance of interoperability within this space. Similarly, increasing interoperability within blockchain networks can enhance the overall efficiency of each network as well as the entire blockchain space in general. 

Alongside increasing blockchain interoperability, cross chain technology aims to facilitate the swapping of tokens or coins, and providing resistance against censorship. 

Cross-chains bridges are so named because they are designed for executing cross-chain transactions. These bridges allow users to receive and send tokens across different networks without having to rely upon a centralized conversion process or exchange. To put it simply, a cross-chain bridge helps transport cryptocurrencies from one network to another. Think of how a physical bridge connects two locations, allowing the residents of either location to now interact with each other. This is pretty much the same thing. 

Some examples of cross-chain bridges are:

  • Binance Bridge
  • Tezos Wrap Protocol Bridge
  • Wormhole Token Bridge
  • Avalanche Bridge
  • BitGo’s Wrapped Bitcoin (WBTC)
  • SmartBCH Bridge
  • Axie Infinity’s Ronin Bridge
  • Terra’s Shuttle Bridge

What is a Multi Chain Bridge?

Multi chain bridges are those that require a project to simultaneously exist on at least two different blockchain networks. This allows for smoother communication and interaction between multiple networks. Cosmos and Polkadot are the two multi chain bridges. 

A multi chain bridge is often constructed to reduce the security problems associated with cross chain bridges. This is achieved through the structural integration and consistency involved in moving from one Cosmos or Polkadot blockchain to another. 

Which Kind of Bridge will dominate the Future?

Determining whether cross chain or multi chain bridges will be successful is not easy, since the answer to this question will be decided by the kind of technologies that will be dominant in the future. If ‘blockchains of blockchains’ like Cosmos or Polkadot are more successful, then the future will likely reside with multi chain bridges.

At the moment, cross-chain bridges are seen as more successful, although most experts agree that these bridges only offer a temporary solution. For this reason, solutions like IBC (Inter Blockchain Traffic) are being actively developed and will likely be responsible for handling the blockchain traffic of the future. 

According to Vitalik Buterin, the co-founder of Ethereum, multi chain bridges will indeed define the future of blockchain networks. However, Butalik also believes that the idea that coin holders will be able to transport currencies across different networks, is so fraught with complications that there is a negligible chance that it will become a reality.

Buterin feels that the bridging technology still contains a lot of security vulnerabilities. In addition, blockchain sovereignty means that each blockchain network is fundamentally different to each other, with its unique set of stipulations and protocols. 

Hacks in Cross Chain Bridges:

The last one year has seen over $1 billion being stolen as a result of bridge-related attacks. Out of all these attacks, the most high-profile ones were those made on the Wormhole Bridge and Ronin Bridge. The Ronin hack exploited the small validation network size. It compromised the workings of multiple, similarly-operated validator nodes, and then used this compromise to drain all the money present in the bridge’s reserves. 

The Wormhole Bridge attack, meanwhile, involved using a design flaw for bypassing the signature validation requirement within the Wormhole Bridge’s smart contracts. This meant that all the tokens contained in the Bridge – which equated to $325 million at the time – were opened up. 

Wrapping Up:

In conclusion, just like the airplane has empowered people to move from one city, country, and continent to another, bridging will make the blockchain world more accessible and expansive for both developers and users. Regardless of how we achieve interoperability, it is going to play a key role in the future of blockchain technology. This is because the technology will become more adoptable and efficient if all blockchain networks are interoperable – and this is the kind of future that we should all be optimistic about. 

As for Vitalik’s criticism, they are not entirely unfounded. However, we must remember that cross-chain technology is still in its infancy and, therefore, is bound to have flaws – but it does not mean that it should already be written off. 

To learn more about blockchain and cryptocurrencies, please feel free to check out some of the other blogs on our website.